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Global Plant Milk Market To Top US$16 Billion in 2018
The global market for dairy alternative drinks is expected to reach US$16.3bn in 2018, up dramatically from US$7.4bn in 2010.
Significant developments in this area include the acquisition of WhiteWave in 2016, presenting Danone with the opportunity to further develop its interests in this dynamic market in both North America and Europe.
In another key region, Want Want, one of Greater China’s leading food processing companies, recently announced its expansion into soy and other plant-based beverages. China is enjoying particularly strong growth for dairy alternative drinks, with a CAGR of 18.7% forecast between 2010 and 2018, reaching a market value of US$6.7bn, compared with a more modest, if still impressive, CAGR of 10% in the US.
Dairy alternative drinks accounted for 7% of global dairy launches recorded by Innova Market Insights in 2016, up from 6% in 2015. Actual global launch numbers more than doubled over a five-year period. Just over half of these launches were positioned as lactose free, nearly 40% as vegan and just under a quarter as GMO-free.
“The dairy alternatives market has seen rising levels of interest in recent years, spurred mainly by consumers increasingly looking for lactose-free, dairy-free and plant-based/vegan options as healthy lifestyle choices, rather than regarding them as simply for those with allergies or intolerances,” says Lu Ann Williams, Director of Innovation at Innova Market Insights. “The category has been further boosted by the growing availability and promotion of plant-based options to traditional dairy lines, particularly beverages, but also cultured products such as yogurt, frozen desserts and ice cream, creamers and cheese.”
“Plant Powered Growth” was one of Innova Market Insights’ Top Trends for 2017, highlighting developments in plant-based foods, which are seeing increased demand from those who do not want to commit to a full vegan or even vegetarian lifestyle, but would rather pick and choose to suit their lifestyle, social life or health conditions.
According to Innova Market Insights, dairy alternative launches grew at a CAGR of 20% over the 2012-2016 period. Meat substitutes had a CAGR of 14% over this period, while the use of vegan positionings in global food and beverage launches tripled from 2012 to 2016.
“In the move to offer something new, we are also starting to see an increasing variety of non-soy plant-based alternatives, including cereals such as rice, oats and barley, and nuts – such as almonds, hazelnuts, cashews, walnuts and macadamias – as well as more unusual options such as hemp and flaxseed,” notes Williams.
“There has also been ongoing launch activity for a range of increasingly sophisticated flavors and also blends of non-dairy milks from different sources. Also in line with the milks market as a whole, there has been a strong move into fashionable milk-based coffee drinks,” she adds.
UK Food And Grocery Forecast To Grow By 15% By 2022
The UK food and grocery market is forecast to grow by 15% between now and 2022, giving it a value of £213 billion, according to the latest forecasts released today by grocery research organisation IGD.
IGD is predicting growth across all the major grocery channels, with the discounters set to put in a particularly strong performance driven by ambitious store opening programmes, new store formats and range investment. By 2022, IGD is forecasting that one in every £7 will be spent at a discounter, up from one in every £9 now.
Other key findings from the new data include: * Online is set to remain the fastest-growing channel, although perhaps not at the same pace as in previous years, as retailers also look to drive growth through their larger store and convenience formats * Both discount and convenience have a more optimistic outlook than previous years and are forecast to grow the second and third fastest respectively of all the grocery channels * There’s a more positive outlook than before for both supermarkets and hypermarkets to 2022, driven by a combination of inflation and investment in the big store experience for shoppers
Joanne Denney-Finch, IGD chief executive, said: “Our market growth figures to 2022 are higher than last year’s forecast, primarily driven by resurgent inflation following three years of sustained deflation across UK food and grocery. All channels are set to see growth, but we anticipate that encouraging shoppers to trade up or buy more will remain as competitive as it always has been – and potentially even more so, given the challenging economic outlook.
"There’s a revolution underway in food and grocery, in terms of what, how and where shoppers do their shopping. On average, shoppers say they use around 12 different stores every month – and in the future, we will have an even greater choice in what, where and how we buy our food. We’ll be more spontaneous but also better planned. We’ll be experimental, eager for new products and experiences. But we’ll also have perennial favourites, staples that we’ll buy on subscription. A quarter (24%) of British shoppers say in the next two to three years, it’s likely they will use an online subscription service to get their staples delivered.
“So the pace of change will be rapid – and this will present huge challenges and opportunities for the industry.”
On the discounters, Joanne Denney-Finch said: “Discounters will contribute most to the cash growth in the market over the next five years, as they continue to open new stores and keep improving the shopper experience with new additions such as food-to-go, self-checkouts and larger stores. Four in five (79%) shoppers say they have visited a variety discounter for some of their grocery shopping in the last month, while two-thirds (62%) say they used a food discounter. And almost three-quarters (70%) of food discount shoppers say the quality of the products they buy from these stores has improved over the last couple of years.”
Joanne Denney-Finch said: “Online will remain the fastest-growing channel over the next five years, but we have lowered our forecast for this part of the market from 2016, as many retailers have also started to refocus their efforts on the in-store experience, which will create additional competition for online.
“However, the size of the prize in online still remains huge. We expect to see the ‘digital native’ – those people who have grown up using technology in many aspects of their lives – help to sustain growth in the future, as they carry on shopping online for groceries and potentially convert others to do the same. In the last month, 40% of all British shoppers say they have bought some of their food and groceries online, but looking ahead to the next two to three years, that figure rises to 60% of shoppers who say it’s likely they will shop online.”
Looking at supermarkets and hypermarkets, Joanne Denney-Finch said: “Larger format stores may no longer be the biggest engines of growth in UK grocery, but nevertheless they remain the place where most people shop for food and groceries. Nearly every shopper in Britain (98%) claims to use a supermarket or a hypermarket for some of their grocery shopping every month, citing the convenience of having everything under one roof (84%) and wider choice (81%).
“Services that shoppers would like to see introduced at larger stores include non-food concessions, local independent food stores and an ‘everyday’ aisle near the front of the store, to enable a speedier shopping experience. We’re already seeing many larger stores move in this direction and expect this to continue over the next few years.”
Joanne Denney-Finch added: “With nine out of 10 shoppers claiming to have visited a convenience store in the last month, it’s not hard to see why we believe this will remain the third-fastest growing grocery channel. Small stores have an enduring appeal and there are some clear opportunities for them to engage the younger generation, with one in five (19%) 18-25-year-olds mainly shopping in convenience stores, which is more than double the number of those aged 26 and over (7%). There’s also a huge opportunity for food-to-go, with more than eight in 10 (83%) c-store shoppers saying they could be encouraged to buy more food-to-go at their main convenience store.”
NPD Will Be Major Source Of Growth For Confident Food Industry
Strong business confidence, product innovation and export potential means food and drink manufacturers are expecting revenue growth, despite a year of substantial change and uncertainty, according to a new report published by accountancy and business advisory firm BDO LLP.
BDO’s Food and Drink Report 2017 found that 73% of manufacturers surveyed are positive about the future of the industry, with 81% of firms expecting revenue growth of up to 20% in the next year.
However, challenges still remain as operating margins continue to be squeezed. Almost a third of firms (28%) have reported a decrease in operating margins this year, with raw materials price inflation having an impact on the bottom line.
For the second year in a row, the BDO survey finds the volatility of raw material prices is the key challenge for food and drink manufacturers – exasperated further by Brexit. This is followed by foreign exchange rates, which was not a major concern for manufacturers questioned last year and seen as a direct result of Brexit uncertainty.
Despite the challenges, firms are proving resilient in their growth ambitions. Just over half of those surveyed said that new product development and investment in production/capex would be a major source of growth, with 49% and 46% saying access to new UK markets and export markets respectively will be an increasingly important part of their growth strategies.
M&A appetite is also on the up with 27% of firms (up from 15% last year) expecting growth to come from transactional activity.
Through product innovation and increasing investment in automation, the industry continues to become increasingly efficient and smart in dealing with market pressures. Two thirds of food and drink firms say they are increasing investment in this area, 15% higher than 2016.
According to the report, the food and drink industry is a prime candidate for greater process automation due to the benefits it brings through increased production output and flexibility, improvements in product quality and reduction in waste.
Interestingly, attracting and retaining skilled labour was named the eighth biggest challenge – falling from second place in 2016. However, over half (57%) of those surveyed did say they were experiencing difficulties in recruiting the skilled people they require.
Worryingly, 31% of manufacturers are not confident that a favourable post-Brexit environment will be negotiated for the food and drink industry, with 40% saying it was too soon to judge what impact Brexit will have on their business in the medium to long term. 32% said Brexit would have no impact on the industry and 14% each were positive and negative.
Export opportunities were identified by 31% as the key positive impact of Brexit and access to labour and skills as the key negative impact by 57% of respondents. When questioned on what would help the food and drink industry grow in the current uncertain landscape, the two most important factors for food and drink manufacturers were improved support for exporting and delivering the future employees/skills for the industry.
Paul Davies, Head of Food and Drink at BDO LLP said:
“The industry continues to be faced by challenges predominantly related to price and margins, and Brexit brings with it new challenges. But it is promising to see high levels of positivity in the industry, with firms pushing forward and adjusting their business plans to make the most of the opportunities available.
“Food and drink businesses are a driving force of growth, contributing jobs and revenue to the UK economy. Yet they are at risk of being overlooked as the UK prepares to leave the European Union. The Government needs to draw on the natural energy, ambition and entrepreneurial-spirit of food and drink businesses and help them succeed post-Brexit.
“We believe the Government can do more to support the industry by ensuring they have open and simple access to world markets to successfully continue trading and deliver growth through new export opportunities. With a workforce where about one in four employees are non-UK EU nationals, the Government needs to deliver simple access to global talent to help secure the industry’s future.”